UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15933 / October 8, 1998
SECURITIES AND EXCHANGE COMMISSION v. CITY SERVICES CORP.,
et al., 98 Civ. 1867 (RPP), U.S.D.C., S.D.N.Y.
The Securities and Exchange Commission ("Commission")
announced that, on October 2, 1998, the United States
District Court for the Southern District of New York entered
a Final Judgment by Default Imposing Remedies against City
Services Corp. ("City Services") and Joseph Burgio
("Burgio"). The order permanently enjoins and restrains
City Services and Burgio from violating the antifraud
provisions of the securities laws, in particular Section
17(a) of the Securities Act of 1933 ("Securities Act") and
Section 10(b) of the Securities Exchange Act of 1934
("Exchange Act") and Rule 10b-5 thereunder, and permanently
restrains and enjoins Burgio from violating antifraud
provisions applicable to broker-dealers, in particular
Section 15(c)(1) of the Exchange Act and Rules 15c1-2 and
15c1-5 thereunder, and from violating the broker-dealer
registration provisions of Section 15(a)(1) of the Exchange
Act. The order also requires City Services and Burgio,
jointly and severally, to disgorge $1,014,605 and $43,055 in
prejudgment interest ($1,057,660 in total) and Burgio to pay
$5,000 as a civil penalty. The order arises from a
complaint filed on March 16, 1998, in which the Commission
alleged that City Services and Burgio fraudulently offered
and sold City Services stock and that Burgio also was acting
as an unregistered broker-dealer.
The defendants are described in the Complaint as
follows:
JOSEPH BURGIO, age 29, is a resident of Brooklyn, New
York. He has held himself out to be the president,
corporate secretary, and chairman of City Services'
board of directors. Between January and March 1, 1998,
Burgio was associated as a registered representative
with Three Arrows Capital Corp. ("Three Arrows"), a
registered broker-dealer that employed Burgio in an
office located in New York, New York. Burgio was not
separately registered with the Commission.
CITY SERVICES CORP. is a Delaware corporation.
According to a private placement memorandum for the
City Services stock offering it purports to have
offices at 29 John Street, New York City. That
location is a mail drop only. Since its inception in
May 1997, City Services has not generated any revenue
or engaged in any operations. City Services stock is
not publicly traded.
The Complaint alleged as follows:
Since at least January 1998, City Services and Burgio
have fraudulently offered and sold City Services stock.
City Services, Burgio and others working with them made
telephonic "cold calls," and offered and sold the City
Services stock to investors by means of a variety of
false and misleading representations, including false
claims that: (a) City Services would hold an initial
public offering in the near future that would enable
investors to more than double their money; (b) City
Services was in the check cashing business; and (c) the
funds raised in the offering would be held in escrow
until the offering closed. While soliciting investors,
Burgio held himself out to be a registered
representative of Three Arrows. Burgio failed to
disclose to at least some of the investors that he was
also an officer of City Services.
Burgio continued to solicit investors to purchase City
Services after his association with Three Arrows
terminated. During the period he was associated with
Three Arrows, he solicited investors without the
authorization of Three Arrows.
Burgio and City Services failed to answer, plead or
otherwise respond to the Commission's Complaint.